Right Wing Revisionist Capitalism

Capitalism and the free market as envisioned by Adam Smith - the father of Capitalism (OR the founder of free market economics) - understood that profit at any cost was not the answer:

Would Smith have stood with America's captains of industry in opposition to the National Labor Relations Act of 1935, which workers the right to form unions, engage in collective bargaining, and to strike? Not likely:

"Servants, labourers, and workmen of different kinds make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged."

Improvement of "the circumstances of the greater part can never be an inconvenience to the whole," says Smith, but it is clearly an inconvenience to "those who live by profit," namely the "merchants and master-manufacturers." Does Smith sympathize with them? On the contrary. Their interest, he writes,

"is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

If you can say "Enron", go to the head of the class.

You always hear the right wing quoting Adam Smith... But the right wing only take parts of Smith's theories on Capitalism ("The Invisible Hand", etc.) that feed into their favorite narratives and disregard his teachings, statements and actions on the necessity of taxes and government regulations and intervention and even the importance of social safety nets in order to protect people from the brutality of what Capitalism can be when taken to extremes.

Smith has been celebrated by advocates of free market policies as the founder of free market economics, a view reflected in the naming of bodies such as the Adam Smith Institute, Adam Smith Society[86] and the Australian Adam Smith Club,[87] and in terms such as the Adam Smith necktie.[88]

Alan Greenspan argues that, while Smith did not coin the term laissez-faire, "it was left to Adam Smith to identify the more-general set of principles that brought conceptual clarity to the seeming chaos of market transactions". Greenspan continues that The Wealth of Nations was "one of the great achievements in human intellectual history".[89] P. J. O'Rourke describes Smith as the "founder of free market economics".[90]

However, other writers have argued that Smith's support for laissez-faire (which in French means leave alone) has been overstated. Herbert Stein wrote that the people who "wear an Adam Smith necktie" do it to "make a statement of their devotion to the idea of free markets and limited government", and that this misrepresents Smith's ideas. Stein writes that Smith "was not pure or doctrinaire about this idea. He viewed government intervention in the market with great skepticism ... yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system. He did not wear the Adam Smith necktie." In Stein's reading, The Wealth of Nations could justify the Food and Drug Administration, the Consumer Product Safety Commission, mandatory employer health benefits, environmentalism, and "discriminatory taxation to deter improper or luxurious behavior".[91]

Similarly, Vivienne Brown stated in The Economic Journal that in the 20th century United States, Reaganomics supporters, The Wall Street Journal, and other similar sources have spread among the general public a partial and misleading vision of Smith, portraying him as an "extreme dogmatic defender of laissez-faire capitalism and supply-side economics".[92] In fact, The Wealth of Nations includes the following statement on the payment of taxes: "The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."[93]

Smith even specifically named taxes that he thought should be required by the state among them luxury goods taxes and tax on rent. He believed that tax laws should be as transparent as possible and that each individual should pay a "certain amount, and not arbitrary," in addition to paying this tax at the time "most likely to be convenient for the contributor to pay it".[94]

Additionally, Smith outlined the proper expenses of the government in The Wealth of Nations, Book V, Ch. I. Included in his requirements of a government is to enforce contracts and provide justice system, grant patents and copy writes, provide public goods such as infrastructure, provide national defense and regulate banking. It was the role of the government to provide goods "of such a nature that the profit could never repay the expense to any individual" such as roads, bridges, canals, and harbours. He also encouraged invention and new ideas through his patent enforcement and support of infant industry monopolies. he supported public education and religious institutions as providing general benefit to the society. Finally he outlined how the government should support the dignity of the monarch or chief magistrate, such that they are equal or above the public in fashion. He even states that monarchs should be provided for in a greater fashion than magistrates of a republic because "we naturally expect more splendor in the court of a king than in the mansion-house of a doge."[95] In addition, he was in favor of retaliatory tariffs and believed that they would eventually bring down the price of goods. He even stated in Wealth of Nations, "The recovery of a great foreign market will generally more than compensate the transitory inconvenience of paying dearer during a short time for some sorts of goods."[96]

Noam Chomsky has argued[N 3] that several aspects of Smith's thought have been misrepresented and falsified by contemporary ideology, including Smith’s reasons for supporting markets and Smith’s views on corporations. Chomsky argues that Smith supported markets in the belief that they would lead to equality, and that Smith opposed wage labor and corporations.[97] Economic historians such as Jacob Viner regard Smith as a strong advocate of free markets and limited government (what Smith called "natural liberty") but not as a dogmatic supporter of laissez-faire.[98]

Economist Daniel Klein believes using the term "free market economics" or "free market economist" to identify the ideas of Smith is too general and slightly misleading. Klein offers six characteristics central to the identity of Smith's economic thought and argues that a new name is needed to give a more accurate depiction of the "Smithian" identity.[99][100] Economist David Ricardo set straight some of the misunderstandings about Smith’s thoughts on free market. Most people still fall victim to the thinking that Smith was a free market economist without exception, though he was not. Ricardo pointed out that Smith was in support of helping infant industries. Smith believed that the government should subsidise newly formed industry, but he did fear that when the infant industry grew into adulthood it would be unwilling to surrender the government help.[101] Smith also supported tariffs on imported goods to counteract an internal tax on the same good. Smith also fell to pressure in supporting some tariffs in support for national defense.[101]


Capitalism as envisioned by Smith is not so bad... It is Capitalism in the hands of people and their corporations that don't give a damn about humanity that is really the problem. And that is what today's free market freaks are. They are anarchists in their extreme views of protecting their own pile of money and stopping government from from helping anyone else with it.

And I know... It sounds a bit like "guns don't kill, people with guns kill people!" but

Also, I'll note that right now the uber rich pay as low as a very arbitrary and paltry 15% of their money in taxes compared to the the 25 to 28% that a teacher, fireman, police officer or doctor will typically pay

And given that Smith was also an advocate for high wages for the poor:

The bicentennial anniversary of the publication of The Wealth of Nations was celebrated in 1976, resulting in increased interest for The Theory of Moral Sentiments and his other works throughout academia. After 1976, Smith was more likely to be represented as the author of both The Wealth of Nations and The Theory of Moral Sentiments, and thereby as the founder of a moral philosophy and the science of economics. His homo economicus or "economic man" was also more often represented as a moral person. Additionally, his opposition to slavery, colonialism, and empire was emphasized, as were his statements about high wages for the poor, and his views that a common street porter was not intellectually inferior to a philosopher.[77]

Do you think it is safe to assume that he believed not in a minimum wage as much as a living wage? I do. The man obviously believed in free markets to a degree, but he was as socially liberal as I am on too many issues.

In that first quote at the top of this post was a ranting and raving liberal Adam Smith clearly talking about living wages that is worth repeating:

"Servants, labourers, and workmen of different kinds make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged."

Because free market Capitalism needs to be balanced by the morality of taking care of others.

There are just way too many cracks for people to slip through if you had an unbridled free market without government intervention in many areas.

And does anyone mistake the modern day banker or corporate executive as being moral people or ethical in their way of putting profit over humanity, at all costs? Toxic towns, oily coasts, smog-filled cities and the destruction of forests and entire ecosystems we need to breathe, live and eat prove otherwise. Never mind their penchant for hoisting the costs of their destructive and immoral behavior on the poor schmucks below them.Yes. Bankers are not the only one's sticking us with their disastrous bills.

And there is no way that anyone on the right can be about Smith's vision of economics and Capitalism at all with all the wars they want to wage for empire and profit.

Just my two cents in response to a comment I got at facebook on this previous post. :)

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